Dell Guilty of Deceiving Customers, NY Judge Rules

By Tiernan Ray

Albany County, New York Supreme Court judge Joseph Teresi this afternoon found Dell (DELL) guilty of charges brought by New York Attorney General Andrew Cuomo of deceiving customers about its customer support offerings, and about the availability of low financing rates. The suit was filed against Dell and its Dell Financial Services LP unit about a year ago. The suit alleged that Dell burdened consumers with expensive lines of credit and failed to offer promised technical support. The Wall Street Journal quotes Judge Teresi as concluding that, “Dell has engaged in repeated misleading, deceptive and unlawful business conduct, including false and deceptive advertising of financing promotions and the terms of warranties, fraudulent, misleading and deceptive practices in credit financing and failure to provide warranty service and rebates.” The Journal says Teresi will hold deliberations to decide what restitution should be granted to consumers. The Associated Press quotes Teresi as saying restitution is due but that, “the record was insufficient to determine how much.”

Dell shares today rose 1.42% and are now unchanged in after-hours trading at $21.49.

Dell and probably all other computer companies advertize attactive warranties, but to really use these warranties when you have a problem is a big hassle. Even if they honor it, the customer has to do all the work, like changing a failed hard drive in the laptop yourself, with guidance on the phone. It took me like 2 hours to do it and still had problems. The replacement parts they send you are always refurbished, so god only can predict how long they will last. Also Dell probably does not know how to build laptops. I may have bought 4 to 5 of them, and all had problems, from high noise to bad touchpads, to name a few problems.

MAY 27, 2008 5:49 P.M.

Matt wrote:

Dell does nto build laptops; they outsource that to OEMs in Taiwan, China, etc. This is standard practice for laptops from most manufacturers.

MAY 27, 2008 6:05 P.M.

Anonymous wrote:

buy apple!

MAY 27, 2008 6:21 P.M.

TMK wrote:

Figures, I U.S. a company gets slapped for crooked dealings and the stock goes up.

MAY 27, 2008 7:12 P.M.

Sue wrote:

I applaud Jacob for enlightening Andrew on a geography/religion lesson. But I must make one small correction. The term is Muslim not "Moslem" And Muslims believe in the Old Testament which includes the Jews. Many people of non-Muslim faith know this. All we see is what the news reports; radical Islamist who are NOT taught from the writings of the Koran, but rather a manipulated and misinterpreted version to further the own corrupted agendas.

MAY 27, 2008 10:07 P.M.

Steve wrote:

I say boycott Dell. I too was deceived by their misleading and deceptive practice. Some years ago I was duped into their financing scheme after I was offering all cash for a desktop computer. I was told the only way I could get a lower advertised price was to accept their financing arrangement and after making one payment I sent a payment for the entire balance after calling their customer service to get the correct amount. About a month later I received a bill for about $35. I called Dell and told them I was billed incorrectly and was told this was some kind of "back interest". I refused to pay the amount and they continued to send a monthly statement with added interest. I continued to complain about this and haven't received any billing from them for quite some time. From time to time they have the nerve to send me their advertising which goes directly to the trash can. I would like to know if there is going to be compensation for those who were taken advantage of. I certainly hope so.

MAY 28, 2008 6:08 A.M.

Pennyltuckian wrote:

Most of you who got ripped probably deserved it --PAY ATTENTION when you buy anything! Do a little research before you buy ... I am no fan of Dell but they are no worse than many other companies...too many times customers don't care about anything other than "can I make the monthly payment?"

MAY 28, 2008 6:09 A.M.

Pennyltuckian wrote:

Most of you who got ripped probably deserved it --PAY ATTENTION when you buy anything! Do a little research before you buy ... I am no fan of Dell but they are no worse than many other companies...too many times customers don't care about anything other than "can I make the monthly payment?" Duh.

MAY 28, 2008 6:17 A.M.

Wine Anyone? wrote:

What a bunch of winers? Sniff Sniff --- more than likely, stupidity played a large role in why people get ripped off. Today, everybody has everything -- even those who can not afford and LCD TV, a new computer, a huge house, etc. have one....even when they really can not afford it -- and the only way to "get it" is to pay the high cost of stupidity.

MAY 28, 2008 7:00 A.M.

Shane A wrote:

Dell is very tricky. They advertise their products below the cost on some , taking the money on the spot and distributing less than perfect product in 4 weeks or more , multiply this by thousands in all the countries , you can have a good some of money to invest on a short term with good interest. Who cares if the products are good or rubbish , who cares if they turn up on time or not. It's gonna take a long time B4 everyone on earth has been effected by this deceptive act , by then Michael Dell has enough money to pass on his great great great grandchildren if he has any balls!!!!

MAY 28, 2008 10:14 A.M.

Jackie Tozer wrote:

I have bought about 6 computers from Dell. Desktops, and 2 laptops, and have NEVER HAD A PROBLEM WITH DELL ! They have forever been
very patient with all my questions, and never hesitated to help with any
problem I've had which mostly were questions on how to do something with their computers. HOORY FOR DELL !!!

MAY 28, 2008 11:03 A.M.

John, TX wrote:

When Dell extended credit to consumers they fell into the deep hole of customers who were not ready to be computer owners and needed more than technical support of the computer. The unexpected demand on customer service and technical support forced the company to cut costs and outsource to places like India, hoping the demand was just a wave a new owners that would eventually be capable of self-serve like previous customers, and incubating a new market of knowledgeable computer users that is now fueling growth. Dell will have to discriminate between profitable and non-profitable customers in the US, perhaps by no longer being able to offer consumer financing.
Thank You Judge Teresi! Hello Best Buy.

MAY 28, 2008 10:09 P.M.

John Wheatley wrote:

Customer care at Dell has gone WAY down hill. I spent days on the phone with very polite Indians. They are surely more professional than those in the states. But they are not empowered. They could not answer a simple question. They kept telling me to call another department. And I have been waiting nearly 30 days to get my registration transfered to Costa Rica, which is required before the warranty will work. Thirty days with no computer! Are they kidding me!! That was my third and last Dell, unless they make some changes. They should talk to UPS to come in and do their support and repairs.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.